March 5, 2012 / 10:01 PM / 8 years ago

UPDATE 1-Chicago gasoline rallies on Enbridge line shutdown

* Chicago gasoline rallies, up 8 cents/gallon

* Canadian crude discounts deepen on pipeline outage

* Midwest refineries meeting obligations, finding new supply

NEW YORK, March 5 (Reuters) - Cash gasoline in the Chicago market rallied in afternoon trading on Monday in response to the shutdown of a major crude oil pipeline that supplies the largest refineries in the Midwest.

Chicago gasoline shot up by 8 cents a gallon to 22.50/21.50 cents under April RBOB gasoline futures on the New York Mercantile Exchange. Gasoline differentials had been steady to late-Friday levels earlier in the day.

Enbridge Inc shut the 318,000 barrel-a-day 14/64 crude line, which carries Canadian crude from Superior, Wisconsin to Griffith, Indiana, early on Saturday after a vehicle collision sparked a fire and a leak on a portion of the line 70 miles (113 km) southwest of Chicago.

The line, which supplies Exxon Mobil’s 238,600 barrels-per-day Joliet refinery in Illinois and BP Plc’s 405,000 bpd plant in Whiting, Indiana, among others, will not be back online before Thursday, Enbridge said.

BP’s Whiting refinery has found new sources of supply and operations at the plant at normal rates, sources said.

An Exxon spokeswoman said the company is “meeting contractual obligations” but declined to comment on day-to-day operations.

P rice reaction in the Midwest refined products market was delayed on Monday as the region is flush with both crude oil and refined products.

Midwest crude oil inventories in the week ended Feb. 24 were at their highest level since September 2011, according to the U.S. Energy Information Administration. February gasoline stocks, on average, were at the highest level since 2010.

In the crude market , the pipeline outage deepened discounts for Canadian heavy crude against U.S. benchmark West Texas Intermediate.

Western Canada Select heavy blend for April delivery traded at C$33.00 ($33.21) per barrel under the West Texas Intermediate benchmark, down from C$32.80 under the benchmark last week. Barrels for March delivery were bid at C$40 a barrel under WTI.

Canadian crude was already suffering deep discounts due to limited pipeline space on Enbridge and other pipeline systems.

The shut line’s capacity is equal to about 3 percent of total U.S. oil imports.

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